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Business owners often wonder "what legal questions should I be asking about my company." Not knowing what should be done next can be overwhelming. Inaction always results in more problems if legal matters are not addressed.
I have created a one page checklist the describes every legal topic a business owner should address. Here is a link to download the Checklist for How to Start and Maintain a Legally Sound Business. A large majority of companies are being purchased by way of an Asset Purchase Sale. This type of transaction allows the buyer to acquire all of the assets without any of the liabilities. An Asset Purchase limits the risk of a lawsuit that stems from the previous entity's actions. There is an asset that some forget to add to these transactions which could be devastating to a company.
If there are employees or independent contractors of the company being purchased, it may be necessary to secure existing non-compete agreements and non-solicitation agreements as part of the transaction. Without ownership of these agreements there is a risk that the employees or contractors could quit and immediately open a competing business. See: Dexxon Digitial Storage, Inc. v. Haenszel et al. 161 Ohio App.3d 747, 832 N.E.2d 62, 2005 -Ohio- 3187 No. There is a common misconception that anyone can be made into an independent contract. That is not true. Further, there can be serious repercussions if you mislabel someone an independent contractor who is not one. Whether a person can be an independent contractor v. an employee generally relates to the degree of control the owner has
Before making the decision to hire or contract for the first time it is best to work with qualified counsel. There needs to be a clear agreement between the company and the contractor and assessment to determine if the person can even be a contractor. If you have an independent contractor now and want to see if you are in trouble or in compliance you can do an evaluation using IRS form SS-8. Here is a link: http://www.irs.gov/pub/irs-pdf/fss8.pdf Business owners are often excited about their new company. But before you invest in designing logos, printing business cards, or buying domain names you will want to make sure there is not a strong likelihood your selected name is going to infringe on another company's name.
You can do this a few different ways: 1) Search on Google using “____” around the name and other, similar name combinations; 2) Search on the United States Patent and Trademark Office website; and 3) Search the Ohio Secretary of State’s website under business name. This will give you a better idea of what is already in existence. The best practice is to file a Federal Trademark to provide the highest level of protection to your business. To use a poker term, if you are a sole proprietor or partnership you are essentially all in on every transaction. By all in I mean everything your business owns and you own is at risk if your are sued.
Forming a Limited Liability Company or Corporation, if properly created, allows you to invest into the business and limit your liability to that investment. To have this limitation of liability you must put in place a formal structure for the company and keep your business assets separate from your personal assets. |
Elliott Stapleton Attorney with CMRS Law
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